A stakeholder is one who is involved in or affected by a course of action we may be engaged in; they are interested parties. Interested parties can be individuals or corporate organisations. Day in day out, we have to deal with stakeholders. Some are in powerful positions, others may not be in powerful positions but equally important in the achievement of our goals. It is therefore essential that we understand how to deal with stakeholders in order to reach our goals.
Why am I interested in talking about stakeholders?
For us, as adults, it is not easy dealing with stakeholders. It comes with its own complexities because of the number of stakeholders one has to deal with. Being able to manage our stakeholders well brings to satisfying rewards. On the contrary, our inability to deal with stakeholders well comes with its own repercussions and stress.
The manner in which we deal with stakeholders in our lives can make or break us. A person can remain in an abusive relation because of the stakeholders (in-laws, society, church, and children) who must be pleased to keep the relationship going at his/her own detriment.
Why do we choose people’s interest above ours?
This is the same for employees who have to hold on to a strangulating job because of stakeholders they cannot fail.
Both individuals and corporate organisations have to deal with stakeholders in their everyday dealings for business and also for their survival. For companies, their stakeholders include employees, government, shareholders, debtors, lenders, competitors, etc. All these stakeholders have varied interest.
- For customers, they are interested in Product/service quality and value – customer satisfaction.
- For the employees, their principal interest is in remuneration and a safe work environment.
- Investors place premium in financial returns.
- Suppliers and vendors on the other hand are enthused with revenues and safety.
- Communities care about health, safety, economic development.
- The governments are excited with taxes and growth in GDP
Difficulty in managing stakeholders is not only limited to individuals. Well-structured organisations have issues managing stakeholders, especially in a principal-agent relationship. As a result, companies rely on the agency theory to identify stakeholders and also work on how to align the interest of stakeholders with the ultimate corporate goals. All these results in agency costs, such as audit cost and share options.
Many conflicts arise when stakeholders’ interest cross
In the management theory, stakeholder management is key to success. Stakeholder management is the process of maintaining good relationships with the people who have the most impact on your business.
Ensuring effective communication is essential to carry stakeholders along
This can be successfully achieved through stakeholders mapping exercises. Stakeholder mapping helps in determining who your stakeholders are and how much engagement and communication they need.
Mapping out also helps to prioritise your stakeholders, you can focus your attention in the most impactful way. This brings to light Mendelow’s stakeholder matrix.
Mendelow’s Matrix consists of four boxes representing stakeholders with. These are:
- High Interest and High Power: when you have such stakeholders, you will need to actively engage them because they have significant influence.
- High Interest and Low Power: stakeholders that fall within this category need to be kept informed because while they have little power themselves, they could attempt to join forces with a group with power to your detriment.
- Low Interest and High Power: because of the power they wield, they must be kept satisfied.
- Low Interest and Low Power: these are the easiest to deal with but they should not be taken for granted. When they are disgruntled, you won’t like their reaction.
Stakeholders can make or unmake your life depending on how you manage your relationship with them. Inasmuch as we need to be conscious of stakeholders in order to have a relatively stress-free life, we need to empower ourselves in reducing our vulnerabilities to dilute the impact of stakeholder actions on our lives. We also need to identify relevant stakeholders so we do not take loss in the pool of stakeholders that we should not be concerned about.
If stakeholder management turns into manipulation, without any respect for the other person or organisation involved, then you are not acting in good faith.
>>>The writer has MBA, BSc, GSE Cert, CA Ghana. http://skafuiteye.blogspot.com/
She is the author of the following books:
- Stepping Up Your Life
- Start Right- A Guide to Financial Investments in Ghana
- Contemporary Parenting
- Overcoming Infertility- What to do When the Gift of Childbirth Delays